UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 2009
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 000-51233
GLADSTONE INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
|
DELAWARE |
|
83-0423116 |
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
1521 WESTBRANCH DRIVE, SUITE 200
MCLEAN, VIRGINIA 22102
(Address of principal executive office)
(703) 287-5800
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12 b-2 of the Exchange Act.
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Large accelerated filer o |
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Accelerated filer x |
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Non-accelerated filer o |
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Smaller reporting company o. |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x .
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares of the issuer’s Common Stock, $0.001 par value, outstanding as of November 2, 2009 was 22,080,133.
GLADSTONE INVESTMENT CORPORATION
TABLE OF CONTENTS
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PART I. |
FINANCIAL INFORMATION: |
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Item 1. |
Financial Statements (Unaudited) |
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3 |
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Condensed Consolidated Schedules of Investments as of September 30, 2009 and March 31, 2009 |
4 |
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10 |
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11 |
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Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2009 and 2008 |
12 |
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Financial Highlights for the three and six months ended September 30, 2009 and 2008 |
13 |
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14 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
26 |
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26 |
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29 |
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36 |
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46 |
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47 |
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48 |
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48 |
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48 |
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48 |
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48 |
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49 |
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49 |
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50 |
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GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
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September 30, |
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March 31, |
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2009 |
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2009 |
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ASSETS |
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Non-Control/Non-Affiliate investments (Cost 9/30/09: $29,886; Cost 3/31/09: $134,836) |
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$ |
25,004 |
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$ |
94,740 |
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Control investments (Cost 9/30/09: $142,698; Cost 3/31/09: $150,081) |
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132,399 |
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166,163 |
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Affiliate investments (Cost 9/30/09: $64,019; Cost 3/31/09: $64,028) |
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46,900 |
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53,027 |
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Total investments at fair value (Cost 9/30/09: $236,603; Cost 3/31/09: $348,945) |
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204,303 |
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313,930 |
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Cash and cash equivalents |
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86,311 |
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7,236 |
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Interest receivable |
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1,212 |
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1,500 |
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Due from Custodian |
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932 |
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2,706 |
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Deferred financing fees |
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963 |
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1,167 |
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Prepaid assets |
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445 |
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172 |
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Other assets |
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184 |
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132 |
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TOTAL ASSETS |
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$ |
294,350 |
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$ |
326,843 |
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LIABILITIES |
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Accounts payable and accrued expenses |
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$ |
460 |
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$ |
1,283 |
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Fee due to Administrator (Refer to Note 4) |
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198 |
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179 |
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Fee due to Adviser (Refer to Note 4) |
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221 |
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187 |
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Short-term loan |
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75,000 |
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— |
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Borrowings under line of credit (Cost 9/30/09: $36,100; Cost 3/31/09: $110,265) |
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36,278 |
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110,265 |
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Other liabilities |
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148 |
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127 |
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TOTAL LIABILITIES |
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112,305 |
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112,041 |
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NET ASSETS |
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$ |
182,045 |
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$ |
214,802 |
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ANALYSIS OF NET ASSETS: |
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Common stock, $0.001 par value, 100,000,000 shares authorized, 22,080,133 shares issued and outstanding at September 30, 2009 and March 31, 2009 |
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$ |
22 |
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$ |
22 |
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Capital in excess of par value |
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264,551 |
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257,361 |
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Net unrealized depreciation of investment portfolio |
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(32,301 |
) |
(35,015 |
) |
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Net unrealized depreciation of derivative |
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(27 |
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(53 |
) |
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Net unrealized appreciation of borrowings under line of credit |
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(178 |
) |
— |
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Accumulated net investment loss |
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(50,022 |
) |
(7,513 |
) |
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TOTAL NET ASSETS |
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$ |
182,045 |
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$ |
214,802 |
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NET ASSETS PER SHARE |
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$ |
8.24 |
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$ |
9.73 |
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS
AS OF SEPTEMBER 30, 2009
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
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Company (1) |
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Industry |
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Investment (2) |
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Cost |
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Fair Value |
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NON-CONTROL/NON-AFFILIATE INVESTMENTS: |
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Senior Syndicated Loans: |
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HMTBP Acquisition II Corp. |
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Service — aboveground storage tanks |
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Senior Term Debt (2.6%, Due 5/2014) (7), (8) |
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$ |
3,819 |
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$ |
3,064 |
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Interstate Fibernet, Inc. |
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Service — provider of voice and data telecommunications services |
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Senior Term Debt (4.3%, Due 7/2013) (7), (9) |
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9,758 |
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7,929 |
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Survey Sampling, LLC |
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Service — telecommunications-based sampling |
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Senior Term Debt (9.5%, Due 5/2011) (3) |
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2,409 |
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958 |
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Subtotal - Syndicated Loans |
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$ |
15,986 |
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$ |
11,951 |
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Non-syndicated Loans: |
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American Greetings Corporation |
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Manufacturing and design — greeting cards |
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Senior Notes (7.4%, Due 6/2016) (3) |
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$ |
3,043 |
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$ |
2,588 |
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B-Dry, LLC |
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Service — basement waterproofer |
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Senior Term Debt (13.0%, Due 5/2014) (5) |
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6,647 |
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6,589 |
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Senior Term Debt (13.0%, Due 5/2014) (5) |
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3,910 |
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3,876 |
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Common Stock Warrants (4) |
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300 |
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— |
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10,857 |
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10,465 |
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Total Non-Control/Non-Affiliate Investments |
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$ |
29,886 |
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$ |
25,004 |
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CONTROL INVESTMENTS: |
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A. Stucki Holding Corp. |
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Manufacturing — railroad freight car products |
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Senior Term Debt (4.8%, Due 3/2012) |
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$ |
9,101 |
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$ |
9,101 |
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Senior Term Debt (7.0%, Due 3/2012) (6) |
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9,900 |
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9,900 |
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Senior Subordinated Term Debt (13.0%, Due 3/2014) |
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8,586 |
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8,586 |
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Preferred Stock (4) |
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4,387 |
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5,333 |
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Common Stock (4) |
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130 |
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3,511 |
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32,104 |
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36,431 |
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Acme Cryogenics, Inc. |
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Manufacturing — manifolds and pipes for industrial gasses |
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Senior Subordinated Term Debt (11.5%, Due 3/2012) |
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14,500 |
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14,500 |
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Preferred Stock (4) |
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6,984 |
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3,828 |
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Common Stock (4) |
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1,045 |
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— |
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Common Stock Warrants (4) |
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24 |
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— |
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22,553 |
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18,328 |
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ASH Holdings Corp. |
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Retail and Service — school buses and parts |
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Revolver, $1,500 available (non-accrual, Due 3/2010) (5) |
|
500 |
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150 |
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Senior Subordinated Term Debt (non-accrual, Due 1/2012) (5) |
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5,937 |
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1,484 |
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Preferred Stock (4) |
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2,500 |
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— |
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Common Stock Warrants (4) |
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4 |
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— |
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8,941 |
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1,634 |
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Cavert II Holdings Corp. |
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Manufacturing — bailing wire |
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Senior Term Debt (8.3%, Due 10/2012) |
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2,875 |
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2,875 |
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Senior Term Debt (10.0%, Due 10/2012) (6) |
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2,700 |
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2,700 |
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Senior Subordinated Term Debt (13.0%, Due 10/2014) |
|
4,671 |
|
4,671 |
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Preferred Stock (4) |
|
4,110 |
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4,769 |
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||
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Common Stock (4) |
|
69 |
|
1,334 |
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14,425 |
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16,349 |
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Chase II Holdings Corp. |
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Manufacturing — traffic doors |
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Revolving Credit Facility, $0 available (4.3%, Due 7/2010) (10) |
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3,500 |
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3,500 |
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Senior Term Debt (8.8%, Due 3/2011) |
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8,250 |
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8,250 |
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Senior Term Debt (12.0%, Due 3/2011) (6) |
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7,600 |
|
7,600 |
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||
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Senior Subordinated Term Debt (13.0%, Due 3/2013) |
|
6,168 |
|
6,168 |
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||
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Preferred Stock (4) |
|
6,961 |
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9,765 |
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||
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Common Stock (4) |
|
61 |
|
670 |
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||
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|
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32,540 |
|
35,953 |
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4
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS (Continued)
AS OF SEPTEMBER 30, 2009
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
|
Company (1) |
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Industry |
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Investment (2) |
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Cost |
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Fair Value |
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CONTROL INVESTMENTS (Continued): |
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Country Club Enterprises, LLC |
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Service — golf cart distribution |
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Subordinated Term Debt (14.0%, Due 11/2014) (5) |
|
$ |
7,000 |
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$ |
6,842 |
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|
|
|
|
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Preferred Stock (4) |
|
3,725 |
|
— |
|
||
|
|
|
|
|
|
|
10,725 |
|
6,842 |
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||
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Galaxy Tool Holding Corp. |
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Manufacturing — aerospace and plastics |
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Senior Subordinated Term Debt (13.5%, Due 8/2013) (5) |
|
17,250 |
|
16,862 |
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||
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|
|
|
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Preferred Stock (4) |
|
4,112 |
|
— |
|
||
|
|
|
|
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Common Stock (4) |
|
48 |
|
— |
|
||
|
|
|
|
|
|
|
21,410 |
|
16,862 |
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||
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Total Control Investments |
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|
|
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$ |
142,698 |
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$ |
132,399 |
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AFFILIATE INVESTMENTS: |
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Danco Acquisition Corp. |
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Manufacturing — machining and sheet metal work |
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Revolving Credit Facility, $2,100 available (9.3%, Due 10/2010) (5) |
|
$ |
900 |
|
$ |
878 |
|
|
|
|
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Senior Term Debt (9.3%, Due 10/2012) (5) |
|
4,312 |
|
4,215 |
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||
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|
|
|
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Senior Term Debt (11.5%, Due 4/2013) (5) |
|
9,067 |
|
8,727 |
|
||
|
|
|
|
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Preferred Stock (4) |
|
2,500 |
|
— |
|
||
|
|
|
|
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Common Stock Warrants (4) |
|
2 |
|
— |
|
||
|
|
|
|
|
|
|
16,781 |
|
13,820 |
|
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Mathey Investments, Inc. |
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Manufacturing — pipe-cutting and pipe-fitting equipment |
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Revolving Credit Facility, $250 available (10.0%, Due 3/2011) (5) |
|
750 |
|
747 |
|
||
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|
|
|
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Senior Term Debt (10.0%, Due 3/2013) (5) |
|
2,375 |
|
2,366 |
|
||
|
|
|
|
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Senior Term Debt (13.5%, Due 3/2014) (5), (6) |
|
7,227 |
|
7,137 |
|
||
|
|
|
|
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Common Stock (4) |
|
500 |
|
— |
|
||
|
|
|
|
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Common Stock Warrants (4) |
|
277 |
|
— |
|
||
|
|
|
|
|
|
|
11,129 |
|
10,250 |
|
||
|
|
|
|
|
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Noble Logistics, Inc. |
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Service — aftermarket auto parts delivery |
|
Revolving Credit Facility, $0 available (4.3%, Due 12/2009) (5) |
|
2,000 |
|
1,300 |
|
||
|
|
|
|
|
Senior Term Debt (9.3%, Due 12/2011) (5) |
|
6,227 |
|
4,048 |
|
||
|
|
|
|
|
Senior Term Debt (10.5%, Due 12/2011) (5) (6) |
|
7,300 |
|
4,745 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
1,750 |
|
— |
|
||
|
|
|
|
|
Common Stock (4) |
|
1,682 |
|
— |
|
||
|
|
|
|
|
|
|
18,959 |
|
10,093 |
|
||
|
|
|
|
|
|
|
|
|
|
|
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Quench Holdings Corp. |
|
Service — sales, installation and service of water coolers |
|
Senior Subordinated Term Debt (10.0%, Due 8/2013) (5) |
|
8,000 |
|
6,240 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
2,950 |
|
1,378 |
|
||
|
|
|
|
|
Common Stock (4) |
|
447 |
|
— |
|
||
|
|
|
|
|
|
|
11,397 |
|
7,618 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Tread Corp. |
|
Manufacturing — storage and transport equipment |
|
Senior Term Debt (12.5%, Due 5/2013) (5) |
|
5,000 |
|
4,962 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
750 |
|
157 |
|
||
|
|
|
|
|
Common Stock & Debt Warrants (4) |
|
3 |
|
— |
|
||
|
|
|
|
|
|
|
5,753 |
|
5,119 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Affiliate Investments |
|
|
|
|
|
$ |
64,019 |
|
$ |
46,900 |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
TOTAL INVESTMENTS |
|
|
|
|
|
$ |
236,603 |
|
$ |
204,303 |
|
5
|
(1) |
Certain of the listed securities are issued by affiliate(s) of the indicated portfolio company. |
|
(2) |
Percentage represents the weighted average interest rates in effect at September 30, 2009, and due date represents the contractual maturity date. |
|
(3) |
Valued based on the indicative bid price on or near September 30, 2009, offered by the respective syndication agent’s trading desk or secondary desk. |
|
(4) |
Security is non-income producing. |
|
(5) |
Fair value based on opinions of value submitted by Standard & Poor’s Securities Evaluations, Inc. at September 30, 2009. |
|
(6) |
Last Out Tranche of senior debt, meaning if the portfolio company is liquidated, the holder of the Last Out Tranche is paid after the senior debt. |
|
(7) |
Security valued based on the sale price obtained at or subsequent to September 30, 2009, as the security, or a portion of it, was sold. |
|
(8) |
Security was sold subsequent to quarter-end; approximately $3.1 million of cash proceeds was received, and a realized loss of $757 was recorded. |
|
(9) |
A portion of this security, approximately $3.0 million in principal, was sold subsequent to quarter-end. Approximately $2.4 million of cash proceeds was received, and a realized loss of $561 was recorded. |
|
(10) |
Revolving credit facility was repaid in full and sold to a third party subsequent to quarter-end. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS
AS OF MARCH 31, 2009
(DOLLAR AMOUNTS IN THOUSANDS)
|
Company (1) |
|
Industry |
|
Investment (2) |
|
Cost |
|
Fair Value |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
NON-CONTROL/NON-AFFILIATE INVESTMENTS: |
|
|
|
|
|
|
|
||||
|
Senior Syndicated Loans: |
|
|
|
|
|
|
|
|
|
||
|
Activant Solutions, Inc. |
|
Service - enterprise software and services |
|
Senior Term Debt (3.4%, Due 5/2013) (7) |
|
$ |
1,658 |
|
$ |
904 |
|
|
Advanced Homecare Holdings, Inc. |
|
Service - home health nursing services |
|
Senior Term Debt (4.3%, Due 8/2014) (7) |
|
2,947 |
|
2,019 |
|
||
|
Aeroflex, Inc. |
|
Service - provider of highly specialized electronic equipment |
|
Senior Term Debt (4.5%, Due 8/2014) (7) |
|
1,892 |
|
1,083 |
|
||
|
Compsych Investments Corp. |
|
Service - employee assistance programs |
|
Senior Term Debt (3.8%, Due 2/2012) (7) |
|
3,083 |
|
2,405 |
|
||
|
CRC Health Group, Inc. |
|
Service - substance abuse treatment |
|
Senior Term Debt (3.5%, Due 2/2012) (7) |
|
7,772 |
|
5,026 |
|
||
|
Critical Homecare Solutions, Inc. |
|
Service - home therapy and respiratory treatment |
|
Senior Term Debt (3.8%, Due 1/2012) (7) |
|
4,359 |
|
3,632 |
|
||
|
Generac Acquisition Corp. |
|
Manufacturing - standby power products |
|
Senior Term Debt (3.0%, Due 11/2013) (7) |
|
6,799 |
|
3,820 |
|
||
|
Graham Packaging Holdings Company |
|
Manufacturing - plastic containers |
|
Senior Term Debt (3.6%, Due 10/2011) (7) |
|
3,348 |
|
2,813 |
|
||
|
HMTBP Acquisition II Corp. |
|
Service - aboveground storage tanks |
|
Senior Term Debt (3.5%, Due 5/2014) (3) |
|
3,838 |
|
2,942 |
|
||
|
Huish Detergents, Inc. |
|
Manufacturing - household cleaning products |
|
Senior Term Debt (2.3%, Due 4/2014) (7) |
|
1,966 |
|
1,690 |
|
||
|
Hyland Software, Inc. |
|
Service - provider of enterprise content management software |
|
Senior Term Debt (3.6%, Due 7/2013) (7) |
|
3,912 |
|
2,990 |
|
||
|
Interstate Fibernet, Inc. |
|
Service - provider of voice and data telecommunications services |
|
Senior Term Debt (5.2%, Due 7/2013) (3) |
|
9,804 |
|
6,698 |
|
||
|
KIK Custom Products, Inc. |
|
Manufacturing - consumer products |
|
Senior Term Debt (2.8%, Due 5/2014) (7) |
|
3,941 |
|
1,862 |
|
||
|
Kronos, Inc. |
|
Service - workforce management solutions |
|
Senior Term Debt (3.5%, Due 6/2014) (7) |
|
1,899 |
|
1,291 |
|
||
|
Local TV Finance, LLC |
|
Service - television station operator |
|
Senior Term Debt (2.5%, Due 5/2013) (7) |
|
985 |
|
359 |
|
||
|
LVI Services, Inc. |
|
Service - asbestos and mold remediation |
|
Senior Term Debt (4.5%, Due 11/2010) (7) |
|
5,916 |
|
2,673 |
|
||
|
MedAssets, Inc. |
|
Service - pharmaceuticals and healthcare GPO |
|
Senior Term Debt (5.1%, Due 10/2013) (7) |
|
3,517 |
|
3,129 |
|
||
|
Network Solutions, LLC |
|
Service - internet domain solutions |
|
Senior Term Debt (3.2%, Due 3/2014) (7) |
|
8,672 |
|
5,506 |
|
||
|
Open Solutions, Inc. |
|
Service - software outsourcing for financial institutions |
|
Senior Term Debt (3.3%, Due 1/2014) (7) |
|
2,648 |
|
1,206 |
|
||
|
Ozburn-Hessey Holding Co. LLC |
|
Service — third party logistics |
|
Senior Term Debt (4.4%, Due 8/2012) (7) |
|
7,523 |
|
5,975 |
|
||
|
Pinnacle Foods Finance, LLC |
|
Manufacturing - branded food products |
|
Senior Term Debt (3.2%, Due 4/2014) (7) |
|
1,950 |
|
1,570 |
|
||
|
PTS Acquisition Corp. |
|
Manufacturing - drug delivery and packaging technologies |
|
Senior Term Debt (2.8%, Due 4/2014) (7) |
|
6,877 |
|
4,264 |
|
||
|
QTC Acquisition, Inc. |
|
Service - outsourced disability evaluations |
|
Senior Term Debt (2.8%, Due 11/2012) (7) |
|
1,763 |
|
1,356 |
|
||
|
Radio Systems Corporation |
|
Service - design electronic pet containment products |
|
Senior Term Debt (3.3%, Due 9/2013) (7) |
|
1,644 |
|
1,308 |
|
||
|
Rally Parts, Inc. |
|
Manufacturing - aftermarket motorcycle parts and accessories |
|
Senior Term Debt (3.5%, Due 11/2013) (7) |
|
2,458 |
|
1,073 |
|
||
|
SafeNet, Inc. |
|
Service — chip encryption products |
|
Senior Term Debt (4.2%, Due 4/2014) (7) |
|
2,949 |
|
2,008 |
|
||
|
SGS International, Inc. |
|
Service - digital imaging and graphics |
|
Senior Term Debt (4.0%, Due 12/2011) (7) |
|
1,475 |
|
978 |
|
||
|
Survey Sampling, LLC |
|
Service - telecommunications-based sampling |
|
Senior Term Debt (9.5%, Due 5/2011) (3) |
|
2,596 |
|
2,441 |
|
||
|
Triad Laboratory Alliance, LLC |
|
Service - regional medical laboratories |
|
Senior Term Debt (4.5%, Due 12/2011) (7) |
|
4,120 |
|
3,432 |
|
||
|
Wastequip, Inc. |
|
Service - process and transport waste materials |
|
Senior Term Debt (2.8%, Due 2/2013) (7) |
|
2,893 |
|
1,530 |
|
||
|
WaveDivision Holdings, LLC |
|
Service - cable |
|
Senior Term Debt (3.5%, Due 6/2014) (7) |
|
1,905 |
|
1,575 |
|
||
|
West Corporation |
|
Service - business process outsourcing |
|
Senior Term Debt (2.9%, Due 10/2013) (7) |
|
3,323 |
|
2,293 |
|
||
|
Subtotal - Senior Syndicated Loans |
|
|
|
|
|
$ |
120,432 |
|
$ |
81,851 |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Non-Syndicated Loans |
|
|
|
|
|
|
|
|
|
||
|
American Greetings Corporation |
|
Manufacturing and design - greeting cards |
|
Senior Notes (7.4%, Due 6/2016) (3) (10) |
|
$ |
3,043 |
|
$ |
2,180 |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
B-Dry, LLC |
|
Service - basement waterproofer |
|
Revolving Credit Facility, $300 available (10.5%, Due 10/2009) (5) |
|
450 |
|
443 |
|
||
|
|
|
|
|
Senior Term Debt (10.0%, Due 5/2014) (5) |
|
6,681 |
|
6,464 |
|
||
|
|
|
|
|
Senior Term Debt (10.0%, Due 5/2014) (5) |
|
3,930 |
|
3,802 |
|
||
|
|
|
|
|
Common Stock Warrants (4) |
|
300 |
|
— |
|
||
|
|
|
|
|
|
|
11,361 |
|
10,709 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Non-Control/Non-Affiliate Investments |
|
|
|
$ |
134,836 |
|
$ |
94,740 |
|
||
7
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS (Continued)
AS OF MARCH 31, 2009
(DOLLAR AMOUNTS IN THOUSANDS)
|
Company (1) |
|
Industry |
|
Investment (2) |
|
Cost |
|
Fair Value |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
CONTROL INVESTMENTS: |
|
|
|
|
|
|
|
|
|
||
|
A. Stucki Holding Corp. |
|
Manufacturing - railroad freight car products |
|
Senior Term Debt (5.0%, Due 3/2012) |
|
$ |
11,246 |
|
$ |
11,246 |
|
|
|
|
|
|
Senior Term Debt (7.2%, Due 3/2012) (6) |
|
10,450 |
|
10,450 |
|
||
|
|
|
|
|
Senior Subordinated Term Debt (13%, Due 3/2014) |
|
8,586 |
|
8,586 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
4,387 |
|
5,128 |
|
||
|
|
|
|
|
Common Stock (4) |
|
130 |
|
14,021 |
|
||
|
|
|
|
|
|
|
34,799 |
|
49,431 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Acme Cryogenics, Inc. |
|
Manufacturing - manifolds and pipes for industrial gasses |
|
Senior Subordinated Term Debt (11.5%, Due 3/2012) |
|
14,500 |
|
14,500 |
|
||
|
|
|
|
|
Redeemable Preferred Stock (4) |
|
6,984 |
|
6,920 |
|
||
|
|
|
|
|
Common Stock (4) |
|
1,045 |
|
— |
|
||
|
|
|
|
|
Common Stock Warrants (4) |
|
25 |
|
— |
|
||
|
|
|
|
|
|
|
22,554 |
|
21,420 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
ASH Holdings Corp. |
|
Retail and Service - school buses and parts |
|
Revolver, $400 available (non—accrual, Due 3/2010) (5) |
|
1,600 |
|
560 |
|
||
|
|
|
|
|
Senior Subordinated Term Debt (non—accrual, Due 1/2012) (5) |
|
5,937 |
|
2,078 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
2,500 |
|
— |
|
||
|
|
|
|
|
Common Stock Warrants (4) |
|
4 |
|
— |
|
||
|
|
|
|
|
|
|
10,041 |
|
2,638 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Cavert II Holding Corp. |
|
Manufacturing - bailing wire |
|
Revolving Credit Facility, $3,000 available (8.0%, Due 10/2010) (8) |
|
— |
|
— |
|
||
|
|
|
|
|
Senior Term Debt (8.3%, Due 10/2012) |
|
5,687 |
|
5,687 |
|
||
|
|
|
|
|
Senior Term Debt (10.0%, Due 10/2012) (6) |
|
2,950 |
|
2,950 |
|
||
|
|
|
|
|
Senior Subordinated Term Debt (13.0%, Due 10/2014) |
|
4,671 |
|
4,671 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
4,110 |
|
4,591 |
|
||
|
|
|
|
|
Common Stock (4) |
|
69 |
|
733 |
|
||
|
|
|
|
|
|
|
17,487 |
|
18,632 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Chase II Holdings Corp. |
|
Manufacturing - traffic doors |
|
Revolving Credit Facility, $1,105 available (4.5%, Due 7/2010) |
|
3,395 |
|
3,395 |
|
||
|
|
|
|
|
Senior Term Debt (8.8%, Due 3/2011) |
|
8,800 |
|
8,800 |
|
||
|
|
|
|
|
Senior Term Debt (12.0%, Due 3/2011) (6) |
|
7,680 |
|
7,680 |
|
||
|
|
|
|
|
Senior Subordinated Term Debt (13.0%, Due 3/2013) |
|
6,168 |
|
6,168 |
|
||
|
|
|
|
|
Redeemable Preferred Stock (4) |
|
6,961 |
|
9,300 |
|
||
|
|
|
|
|
Common Stock (4) |
|
61 |
|
5,537 |
|
||
|
|
|
|
|
|
|
33,065 |
|
40,880 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Country Club Enterprises, LLC |
|
Service - golf cart distribution |
|
Subordinated Term Debt (14.0% Due 11/2014) |
|
7,000 |
|
7,000 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
3,725 |
|
3,725 |
|
||
|
|
|
|
|
|
|
10,725 |
|
10,725 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Galaxy Tool Holding Corp. |
|
Manufacturing - aerospace and plastics |
|
Senior Subordinated Term Debt (13.5%, Due 8/2013) |
|
17,250 |
|
17,250 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
4,112 |
|
4,486 |
|
||
|
|
|
|
|
Common Stock (4) |
|
48 |
|
701 |
|
||
|
|
|
|
|
|
|
21,410 |
|
22,437 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Control Investments |
|
|
|
|
|
$ |
150,081 |
|
$ |
166,163 |
|
8
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS (Continued)
AS OF MARCH 31, 2009
(DOLLAR AMOUNTS IN THOUSANDS)
|
Company (1) |
|
Industry |
|
Investment (2) |
|
Cost |
|
Fair Value |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
AFFILIATE INVESTMENTS: |
|
|
|
|
|
|
|
|
|
||
|
Danco Acquisition Corp. |
|
Manufacturing - machining and sheet metal work |
|
Revolving Credit Facility, $2,600 available (9.3%, Due 10/2010) (5) (9) |
|
$ |
400 |
|
$ |
378 |
|
|
|
|
|
|
Senior Term Debt (9.3%, Due 10/2012) (5) |
|
4,837 |
|
4,584 |
|
||
|
|
|
|
|
Senior Term Debt (11.5%, Due 4/2013) (5) |
|
9,113 |
|
8,544 |
|
||
|
|
|
|
|
Redeemable Preferred Stock (4) |
|
2,500 |
|
2,558 |
|
||
|
|
|
|
|
Common Stock Warrants (4) |
|
3 |
|
— |
|
||
|
|
|
|
|
|
|
16,853 |
|
16,064 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Mathey Investments, Inc. |
|
Manufacturing - pipe-cutting and pipe-fitting equipment |
|
Revolving Credit Facility, $1,463 available (9.0%, Due 3/2011) (5) (9) |
|
537 |
|
529 |
|
||
|
|
|
|
|
Senior Term Debt (9.0%, Due 3/2013) (5) |
|
2,375 |
|
2,339 |
|
||
|
|
|
|
|
Senior Term Debt (12.0%, Due 3/2014) (5)(6) |
|
7,227 |
|
7,082 |
|
||
|
|
|
|
|
Common Stock (4) |
|
500 |
|
446 |
|
||
|
|
|
|
|
Common Stock Warrants (4) |
|
277 |
|
260 |
|
||
|
|
|
|
|
|
|
10,916 |
|
10,656 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Noble Logistics, Inc. |
|
Service - aftermarket auto parts delivery |
|
Revolving Credit Facility, $-0- available (6.5%, Due 12/2009) (5) |
|
2,000 |
|
1,500 |
|
||
|
|
|
|
|
Senior Term Debt (10.5%, Due 12/2011) (5) |
|
5,727 |
|
4,295 |
|
||
|
|
|
|
|
Senior Term Debt (12.5%, Due 12/2011) (5)(6) |
|
7,300 |
|
5,475 |
|
||
|
|
|
|
|
Senior Subordinated Term Debt (18.0%, Due 12/2011) |
|
500 |
|
375 |
|
||
|
|
|
|
|
Senior Subordinated Term Debt (14.0%, Due 5/2009) |
|
150 |
|
149 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
1,750 |
|
— |
|
||
|
|
|
|
|
Common Stock (4) |
|
1,682 |
|
— |
|
||
|
|
|
|
|
|
|
19,109 |
|
11,794 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Quench Holdings Corp. |
|
Service - sales, installation and service of water coolers |
|
Senior Subordinated Term Debt (10.0%, Due 8/2013) (5) |
|
8,000 |
|
5,800 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
2,950 |
|
2,542 |
|
||
|
|
|
|
|
Common Stock Warrants (4) |
|
447 |
|
— |
|
||
|
|
|
|
|
|
|
11,397 |
|
8,342 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Tread Corp. |
|
Manufacturing - storage and transport equipment |
|
Senior Term Debt (12.5%, Due 5/2013) (5) |
|
5,000 |
|
4,925 |
|
||
|
|
|
|
|
Preferred Stock (4) |
|
750 |
|
793 |
|
||
|
|
|
|
|
Common Stock Warrants (4) |
|
3 |
|
453 |
|
||
|
|
|
|
|
|
|
5,753 |
|
6,171 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Affiliate Investments |
|
|
|
|
|
$ |
64,028 |
|
$ |
53,027 |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Investments |
|
|
|
|
|
$ |
348,945 |
|
$ |
313,930 |
|
|
(1) |
Certain of the listed securities are issued by affiliate(s) of the indicated portfolio company. |
|
(2) |
Percentage represents the weighted average interest rates in effect at March 31, 2009, and due date represents the contractual maturity date. |
|
(3) |
Security valued using internally-developed, risk-adjusted discounted cash flow methodologies as of March 31, 2009. |
|
(4) |
Security is non-income producing. |
|
(5) |
Fair value based on opinions of value submitted by Standard & Poor’s Securities Evaluations, Inc. at March 31, 2009. |
|
(6) |
Last Out Tranche of senior debt, meaning if the portfolio company is liquidated, the holder of the Last Out Tranche is paid after the senior debt. |
|
(7) |
Security valued based on the sale price obtained at or subsequent to March 31, 2009, since the security was sold. |
|
(8) |
Revolver was sold to third party subsequent to March 31, 2009. |
|
(9) |
Terms of agreement were refinanced and revolver limit was reduced. |
|
(10) |
The Company received non-cash assumption of $3,043 worth of senior notes received from American Greetings Corporation for the Company’s agreement to the RPG bankruptcy settlement in which the Company received the aforementioned notes and $909 in cash and recognized a loss on the settlement of approximately $601. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
9
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
|
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
||||
|
INVESTMENT INCOME |
|
|
|
|
|
|
|
|
|
||||
|
Interest income |
|
|
|
|
|
|
|
|
|
||||
|
Non-Control/Non-Affiliate investments |
|
$ |
615 |
|
$ |
2,134 |
|
$ |
1,351 |
|
$ |
4,458 |
|
|
Control investments |
|
2,868 |
|
2,735 |
|
5,736 |
|
5,304 |
|
||||
|
Affiliate investments |
|
1,448 |
|
1,349 |
|
2,928 |
|
2,460 |
|
||||
|
Cash and cash equivalents |
|
1 |
|
22 |
|
1 |
|
46 |
|
||||
|
Total interest income |
|
4,932 |
|
6,240 |
|
10,016 |
|
12,268 |
|
||||
|
Other income |
|
11 |
|
576 |
|
96 |
|
586 |
|
||||
|
Total investment income |
|
4,943 |
|
6,816 |
|
10,112 |
|
12,854 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
EXPENSES |
|
|
|
|
|
|
|
|
|
||||
|
Loan servicing fee (Refer to Note 4) |
|
938 |
|
1,258 |
|
2,006 |
|
2,511 |
|
||||
|
Base management fee (Refer to Note 4) |
|
164 |
|
435 |
|
477 |
|
861 |
|
||||
|
Administration fee (Refer to Note 4) |
|
198 |
|
212 |
|
371 |
|
447 |
|
||||
|
Interest expense |
|
552 |
|
1,084 |
|
1,255 |
|
2,186 |
|
||||
|
Amortization of deferred finance costs |
|
438 |
|
140 |
|
751 |
|
278 |
|
||||
|
Professional fees |
|
118 |
|
183 |
|
320 |
|
314 |
|
||||
|
Stockholder related costs |
|
146 |
|
200 |
|
227 |
|
301 |
|
||||
|
Insurance expense |
|
62 |
|
55 |
|
119 |
|
108 |
|
||||
|
Directors’ fees |
|
48 |
|
48 |
|
99 |
|
95 |
|
||||
|
Other |
|
73 |
|
114 |
|
137 |
|
189 |
|
||||
|
Expenses before credit from Adviser |
|
2,737 |
|
3,729 |
|
5,762 |
|
7,290 |
|
||||
|
Credits to base management fee (Refer to Note 4) |
|
(165 |
) |
(696 |
) |
(466 |
) |
(1,270 |
) |
||||
|
Total expenses net of credit to base management fee |
|
2,572 |
|
3,033 |
|
5,296 |
|
6,020 |
|
||||
|
NET INVESTMENT INCOME |
|
2,371 |
|
3,783 |
|
4,816 |
|
6,834 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
REALIZED AND UNREALIZED (LOSS) GAIN ON: |
|
|
|
|
|
|
|
|
|
||||
|
Realized loss on sale of Non-Control/Non-Affiliate investments |
|
— |
|
(2,498 |
) |
(34,605 |
) |
(4,215 |
) |
||||
|
Realized loss on termination of derivative |
|
— |
|
— |
|
(53 |
) |
— |
|
||||
|
Net unrealized (depreciation) appreciation of Non-Control/Non-Affiliate investments |
|
(1,514 |
) |
(5,191 |
) |
35,214 |
|
(726 |
) |
||||
|
Net unrealized (depreciation) appreciation of Control investments |
|
(14,900 |
) |
10,840 |
|
(26,381 |
) |
5,973 |
|
||||
|
Net unrealized depreciation of Affiliate investments |
|
(3,853 |
) |
(5,978 |
) |
(6,119 |
) |
(11,393 |
) |
||||
|
Net unrealized (depreciation) appreciation of derivative |
|
(16 |
) |
— |
|
26 |
|
— |
|
||||
|
Net unrealized appreciation of borrowings under line of credit |
|
(178 |
) |
— |
|
(178 |
) |
— |
|
||||
|
Net loss on investments and borrowings under line of credit |
|
(20,461 |
) |
(2,827 |
) |
(32,096 |
) |
(10,361 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
|
$ |
(18,090 |
) |
$ |
956 |
|
$ |
(27,280 |
) |
$ |
(3,527 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||
|
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
||||
|
Basic and Diluted |
|
$ |
(0.82 |
) |
$ |
0.04 |
|
$ |
(1.24 |
) |
$ |
(0.17 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||
|
SHARES OF COMMON STOCK OUTSTANDING: |
|
|
|
|
|
|
|
|
|
||||
|
Basic and diluted weighted average shares |
|
22,080,133 |
|
22,080,133 |
|
22,080,133 |
|
21,011,740 |
|
||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
10
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
|
|
|
Six Months Ended September 30, |
|
||||
|
|
|
2009 |
|
2008 |
|
||
|
Operations: |
|
|
|
|
|
||
|
Net investment income |
|
$ |
4,816 |
|
$ |
6,834 |
|
|
Realized loss on sale of investments |
|
(34,605 |
) |
(4,215 |
) |
||
|
Realized loss on termination of derivative |
|
(53 |
) |
— |
|
||
|
Net unrealized appreciation (depreciation) of portfolio |
|
2,714 |
|
(6,146 |
) |
||
|
Net unrealized appreciation of derivative |
|
26 |
|
— |
|
||
|
Net unrealized appreciation of borrowings under line of credit |
|
(178 |
) |
— |
|
||
|
Net decrease in net assets from operations |
|
(27,280 |
) |
(3,527 |
) |
||
|
|
|
|
|
|
|
||
|
Capital transactions: |
|
|
|
|
|
||
|
Issuance of common stock |
|
— |
|
41,290 |
|
||
|
Shelf offering registration costs |
|
(178 |
) |
(643 |
) |
||
|
Distributions to stockholders |
|
(5,299 |
) |
(10,157 |
) |
||
|
Net (decrease) increase in net assets from capital transactions |
|
(5,477 |
) |
30,490 |
|
||
|
|
|
|
|
|
|
||
|
Total (decrease) increase in net assets |
|
(32,757 |
) |
26,963 |
|
||
|
Net assets at beginning of period |
|
214,802 |
|
206,445 |
|
||
|
|
|
|
|
|
|
||
|
Net assets at end of period |
|
$ |
182,045 |
|
$ |
233,408 |
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
11
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
|
|
|
Six Months Ended September 30, |
|
||||
|
|
|
2009 |
|
2008 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
||
|
Net decrease in net assets resulting from operations |
|
$ |
(27,280 |
) |
$ |
(3,527 |
) |
|
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities: |
|
|
|
|
|
||
|
Purchase of investments |
|
(968 |
) |
(36,612 |
) |
||
|
Principal repayments of investments |
|
9,482 |
|
22,284 |
|
||
|
Proceeds from sales of investments |
|
69,222 |
|
13,296 |
|
||
|
Proceeds from short-term borrowings |
|
75,000 |
|
— |
|
||
|
Net realized loss on sales of investments |
|
34,605 |
|
4,215 |
|
||
|
Net realized loss on termination of derivative |
|
53 |
|
— |
|
||
|
Net unrealized (appreciation) depreciation of investment portfolio |
|
(2,714 |
) |
6,146 |
|
||
|
Net unrealized appreciation of derivative |
|
(26 |
) |
— |
|
||
|
Net unrealized appreciation of borrowings under line of credit |
|
178 |
|
— |
|
||
|
Net amortization of premiums and discounts |
|
— |
|
19 |
|
||
|
Amortization of deferred financing costs |
|
751 |
|
278 |
|
||
|
Decrease in interest receivable |
|
288 |
|
309 |
|
||
|
Decrease in due from custodian |
|
1,774 |
|
1,351 |
|
||
|
Increase in prepaid assets |
|
(273 |
) |
(114 |
) |
||
|
(Increase) decrease in other assets |
|
(40 |
) |
309 |
|
||
|
Decrease in accounts payable and accrued liabilities |
|
(823 |
) |
(167 |
) |
||
|
Increase in administration fee payable to Administrator (See Note 4) |
|
19 |
|
4 |
|
||
|
Increase in base management fee payable to Adviser (See Note 4) |
|
113 |
|
123 |
|
||
|
Decrease in loan servicing fee payable to Adviser (See Note 4) |
|
(79 |
) |
(7 |
) |
||
|
Increase in other liabilities |
|
21 |
|
13 |
|
||
|
Net cash provided by operating activities |
|
159,303 |
|
7,920 |
|
||
|
|
|
|
|
|
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
||
|
Net proceeds from the issuance of common stock |
|
(178 |
) |
40,647 |
|
||
|
Borrowings from line of credit |
|
79,000 |
|
129,000 |
|
||
|
Repayments of line of credit |
|
(153,165 |
) |
(142,870 |
) |
||
|
Purchase of derivative |
|
(39 |
) |
— |
|
||
|
Deferred financing costs |
|
(547 |
) |
— |
|
||
|
Distributions paid |
|
(5,299 |
) |
(10,157 |
) |
||
|
Net cash (used in) provided by financing activities |
|
(80,228 |
) |
16,620 |
|
||
|
|
|
|
|
|
|
||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
79,075 |
|
24,540 |
|
||
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
7,236 |
|
9,360 |
|
||
|
|
|
|
|
|
|
||
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
$ |
86,311 |
|
$ |
33,900 |
|
|
|
|
|
|
|
|
||
|
CASH PAID DURING PERIOD FOR INTEREST |
|
$ |
1,418 |
|
$ |
2,134 |
|
|
|
|
|
|
|
|
||
|
NON-CASH ACTIVITIES (1) |
|
$ |
850 |
|
— |
|
|
|
(1) |
|
On April 10, 2009, the Company made an investment disbursement to Cavert II Holding Corp. for approximately $850 on their revolving line of credit, and the proceeds were used to make the next four quarterly payments due under normal amortization for both their senior term A and senior term B loans in a non-cash transaction. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
12